McKinney Skirts Taxpayer Oversight with the Avelo Airlines Contract

The city of McKinney and City Council cite a 2013 resolution authorizing the city manager to sign contracts related to the acquisition of airport assets as the reason they bypassed the usual public disclosure and scrutiny when they signed the Avelo Airlines contract two months ago. Nothing was presented to the public either before or after the signing.

In an email answering why the Avelo contract did not go through the usual city council meeting process, Barry Shelton, McKinney’s Assistant City Manager, responded:
“In the case of the airport, the City Council back in 2013 approved a resolution delegating authority to “execute any contracts, leases, subleases, vendor or supply agreements necessary to operate and protect the Assets upon purchase.” “

Does that 2013 resolution really authorize the city to get by without taxpayer inspection and scrutiny with the Avelo Airlines contract?

Upon further inspection, the 2013 resolution specifically addressed the acquisition of airport buildings, hangars, and other business assets on land already owned by the city at the time of the resolution—in 2013.

The city of McKinney, however, did not even buy the land Avelo Airlines will be operating on until 2019. There were no assets for the city to buy in the 2019 land acquisition either. Why would the city think this resolution, which is specific to land already owned by the city in 2013, gives the City Manager blanket authority to authorize all future contracts for lands, assets, and airliner contracts not yet owned by the city for the airport now and forever?

There were also no public hearings at the meetings for either the 9/2013 or 10/2013 resolutions before this authorization was given to the then City Manager, Jason Gray. The resolutions were at least on public agendas, though. The agenda and video of the 9/2013 discussion is here. There was no discussion at all for the 10/2013 resolution.

Is the City thinking that Section 4 from the 10/2013 resolution authorizes any and all future airport business contracts be handled out of the public eye?

“Section 4. The City Manager is further authorized to execute any contracts,leases, subleases, vendor or supply agreements necessary to operate and protect the Assets (the “Related Agreements”), upon purchase. The City’s assumption,payment, discharge and performance of the Related Agreements are expressly conditionedupon Closing.” 

If the 10/2013 resolution legitimately allows the City Manager to enter into contracts without coming before City Council, why do smaller contracts, like the one for FBO apron lighting in 2024, come before City Council? 

The Notes Live music venue, on the other hand, has appeared before the City Council four times, each time the contract was revised. Shouldn't that be the standard for all city contracts?

As of now, the city of McKinney and Avelo Airlines are fighting the disclosure of the signed contract details in response to my open records request.

There is no doubt that the McKinney taxpayer is being left in the dark. The taxpayer must wait for the city of McKinney to voluntarily disclose the required financial details that will impact city finances for years to come. That is not how this is supposed to work, especially since the taxpayer is footing the bill.

McKinney Seeks $73M for Budget Commercial Airport "Proof of Concept"

 At its January meeting, the McKinney Community Development Corporation (MCDC) heard from organizations and groups wanting grants. The long-controversial city airport came asking for $30M in financing. Grant requests will awarded at the February meeting. Earlier in January, the city asked the McKinney Economic Development Corporation (MEDC) for $22.4M.

                          City Presentation 

The city cannot use property tax money for three years after two failed commercial airport bonds (one in 2015 for the land and another one in 2023 for a terminal). While the city waits out the clock, its only recourse seems to be the MCDC and MEDC.

The city of McKinney asked the MCDC for a $30M bridge loan, either from the fund balance or by taking out sales tax bonds, until a federal Rural TIFIA loan can be secured. This would require at least two years of yearly $1M interest only payments. The city is prepared to have the MCDC carry the entire loan if the TIFIA loan does not work out.

The combined $52M ask is for a budget, “proof of concept” commercial airport they will use to woo a budget airline. There is still no firm commitment from an airliner. Here is the specific wording from the grant application:

“The proposed infrastructure will enable development of various aviation uses on the east side of the airport. The plan is to maximize flexibility to allow for growth in the future as the market and economy dictate. The proposed terminal is a small phase one terminal that is expandable but is intended as an inexpensive terminal to prove that commercial service is viable at TKI. If commercial service is successful, future expansion would include the construction of an entirely new terminal north of the first phase. The first phase terminal would continue to offer gates for the terminal or could be repurposed as a maintenance facility and/or rental car facility.” 

Both the MEDC and MCDC collect a half-cent each of sales tax revenue. That allotment translates into roughly $25M a year. The MCDC alone has saved over $47M in a fund balance for future unnamed projects—like the airport.

The MCDC left the public hearing open for the $30M commercial grant.
Please email the MCDC board at Info@mckinneycdc.org on agenda item # 25-2377.

There will also be a joint City Council, MEDC, and MCDC meeting on 2/18/25 at 4pm. The airport will likely be discussed.

For more background on the changing role of the MCDC, please see the following past articles:

McKinney’s Community Development Corporation Changes Focus

McKinney Leadership’s Heard Problem

The $200M Airport Bond

190 Acre Airport Land Purchase

Demystifying McKinney's Airport

McKinney Leadership’s Heard Problem

The 289-acre non-profit Heard Natural Science Museum and Wildlife Sanctuary is located on McKinney's east side. It is the definition of the kind of open space that fits McKinney’s “Unique by Nature” motto. It is a tourist attraction and a hidden gem for nature lovers.

Visitors canoeing, photo from The Heard's website 

Community groups meet at the Heard. School district and homeschool students learn about nature year-round. The Heard’s founder, Bessie Heard, was a woman ahead of her time and a downtown McKinney icon. With all the Heard has to offer, one would think the city of McKinney and its leadership would partner with Heard as they eagerly do with places like Tupps Brewery and the airport. Instead, the city of McKinney and its leaders push the Heard to the side.

The reason the Heard Natural Science Museum and Wildlife Sanctuary is problematic for McKinney’s leadership is simple— the airport. City leadership is on a mission to convert the general aviation airport into a commercial airport. Last year, citizens voted down a $200M bond meant for that purpose. This November's charter election will decide if the current mayor can have his term extended to continue his pursuit of a commercial airport. It is hard for the city and its leaders to concentrate money and effort on expanding the city’s airport when it is located right next to a nature preserve with a mission to educate, preserve, and conserve the environment. These two projects are close in proximity but worlds apart in their missions.

McKinney goes quite far to pretend the Heard does not exist. In the city’s 2040 comprehensive plan, the Heard is swallowed up in the so-called “Airport and Aviation District.” 

The Heard is located in the black circle at the bottom left of the aviation area.

The McKinney Community Development Corporation (MCDC) has been the primary financial support for non-profits like the Heard. The MCDC has given minimal yearly grant support to the Heard, similar to the grants the MCDC gives to fundraisers and cultural events in downtown McKinney.

Here's the history and purpose of the MCDC according to its website:

“In 1996, McKinney voters approved a half-cent sales tax to be used to provide grants to projects and events that would enhance McKinney’s aesthetic, cultural, and leisure amenities. Over the past 25 years, MCDC has invested nearly $225 million back into the community.”

The MCDC’s mission statement:

“Staying true to voter intent, we work proactively, in partnership with others, to promote and fund community, cultural and economic development projects that maintain and enhance the quality of life in McKinney.”

This year, the Heard applied to the MCDC for a $148,000 project grant to restore the Blackland Prairie area of its nature preserve. The application was formally presented to the MCDC board in April. The board asked five questions of the Heard representatives, ranging from interest in controlled burns to whether they could get a used tractor instead of a new one. Not one word was said indicating anything was wrong with their application. No other comments indicated a potential denial based on MCDC priorities or the inappropriateness of the application. *Oddly, project grants for community purposes, not just economic development, are now being discussed in MCDC's closed executive sessions. 

At the next MCDC meeting in May, the Heard’s project grant application came up for a vote. Not one person from the board said a word. After a lengthy silence, a member requested a vote to deny. The denial of Heard’s project grant request passed7-0. At the same meeting, the MCDC board approved a $3.6M project grant for airport infrastructure. The Notes Live for-profit outdoor amphitheater project was given $3M. Right now, the MCDC has a fund balance of about $30M. The Heard application looks like it was the only project denied this past fiscal year. 

Whether McKinney’s leadership likes it or not, the Heard is an asset to the city. It attracts tourism, educates citizens of all ages, and conserves and preserves open spaces. The Heard ticks all the boxes city leaders profess they want to support and promote. Whether a commercial airport is in McKinney's future or not, city leadership must find a way to work constructively with the Heard, just like it does with other non-profits in the city. 

The Airport Bond Postmortem – Were There Warning Signs?

A lot of taxpayer money was wasted on the idea and execution of the airport bond from the moment the first consultant was hired in 2019. Were there signs that the city council would go on to spend $4M on consultants alone? Did we just miss the signs?

Were public hearings missed? Are there even public hearings for consultants? If not, would there be a total amount that might trigger a public hearing? Are there explicit wording requirements for the spending that can be seen on agenda items that aren’t public hearing items? Does the secret nature of this kind of economic development actually prevent public input and involvement?

The good news is that Mr. Grimes, the city manager, helped answer my questions. The bad news is that there was really no way for us to know what was coming. I know that when looked into the agenda items they were vague. Nor were there any ways we could have gotten involved in the decision-making process. That must change, or we’ll end up in this situation again.

I will just cut and paste his emailed answer because it is inclusive of all my questions:

"I have reviewed the approvals you reference below.  The consent agenda is where you will find many of our ordinances amending the budget and resolutions authorizing the City Manager to sign contracts.  While there is not a set contract amount threshold that, when crossed, requires an item to be moved to the regular agenda, larger contracts sometimes do get placed on the regular agenda to allow for a staff presentation.  Consent items are still on the public agenda, and the City Council can always request that a consent agenda item be pulled down for discussion.  If a member of the public wished for an item to be pulled down from consent and be considered individually, they can certainly speak at the public comment period and/or send a note to the council in advance requesting so.  My hunch is that at least one member of the council would grant such request, and every council member has the ability to exercise that discretion.

 

Below are the agenda items relating to the east side EA and the east side programming documents.  Of these items, the only public hearing was held during the TIRZ 2 Board meeting where $2 million was approved towards the programming document process.  Airport Director Ken Carley presented during this meeting and explained the request for TIRZ funding.

 

12/7/21 City Council Meeting – Agenda Item #21-1072 (consent) – Ordinance amending budget providing $550,000 for East Side Environmental Assessment

12/7/21 City Council Meeting – Agenda Item #21-1080 (consent) – Resolution approving contract with Garver for East Side Environmental Assessment

 

1/4/22 TIRZ 2 Board Meeting – Agenda Item #21-1183 (public hearing) – Resolution authorizing $2.0 million in TIRZ funds for East Side Programing Documents

1/4/22 City Council Meeting – Agenda Item #21-1170 (consent) Ordinance amending budget providing $1.5 million from Airport Operating Fund Balance and $2.0 million from TIRZ 2 Fund Balance for East Side Programming Documents.

1/4/22 City Council Meeting – Agenda Item #21-1173 (consent) – Resolution approving contract with Garver for East Side Programming Documents

 

3/7/23 City Council Meeting – Agenda Item #21-0166 (consent) – Ordinance amending budget appropriating $234,000 from the Airport Construction Fund balance to Airport Long Range Planning"

How many people would know what "East Side Programming Documents" meant? I know I thought they were talking about the runway extension that we already knew about.

If we asked our city council members what was going on at the time of the first or second consultant authorization, how many would have told us that they were in the planning stages of another airport bond, especially if they considered the airport an economic development that possibly included secret negotiations? It would be interesting to get their thoughts on this question. 

Transparency must be improved, especially in the case of consultants—any consultants.

McKinney’s Airport/Downtown Reality

City of McKinney 2019 Community Opinion Survey regarding commercial airport flights

The results of the 2019 National Citizen Survey for McKinney and city Budget Survey show that citizen opinion on the airport is conflicted. However, the new City Council goals for 2019 show the airport continues to stay as a top 5 priorities. This means more and more money will be put into the airport. 

In the annual Budget survey on the city of McKinney's website, the airport has been listed as the bottom priority of 10 priorities for at least the past two years. For the 2019 National Citizen Survey, 48% of paper survey respondents and 38% of online respondents strongly favor offering commercial airline services in McKinney (out of about 340 who actually responded). About 70% of those who support commercial service would be fine with low-budget carriers like Spirit or Frontier (see p. 27 of the opinion survey). Maybe those who support commercial airline services believe we would all benefit financially from such an arrangement. 

The complex revenue bubbles (TIRZ traps) the airport, downtown, and their surrounding areas are under mean that the general fund will not see the tangible results of any success in any of those areas past the low amounts the general fund already gets each year as long as the two TIRZ remain in place:

• No matter how successful the downtown TIRZ #1 area gets, that area will only give the general fund about $2.6M in sales, use, and property taxes a year maximum.
• No matter how business explodes, the airport TIRZ #2 area will only give the general fund about $1.2M in sales, use, and property taxes a year maximum.

TIRZ1 & TIRZ2 on the right and left of Hwy 5

The rest of the profits in the downtown and airport areas stay in their TIRZ funds to be used only on their respective TIRZ areas for very specific projects (not for things like fire, police, or other city services). The TIRZ funds are controlled by appointed City Council members and representatives of the county and ISD.

Let’s say that the McKinney airport starts commercial low-budget flight services and commercial business multiplies in the industrial zones located all around the airport. One would think that our dreams of a higher commercial tax base that could lower our residential property tax burden would be realized. One would think that the whole city would directly benefit from successful downtown and airport areas. Unfortunately, the rest of the city will only benefit indirectly, if anything. Maybe more people rent apartments or go to the grocery stores outside of the TIRZ areas. Maybe there is a prestige that makes people feel good.

For more, click here.